Indictment Describes Dark Side Of Social Media Financial Influencers

Most traditional stock traders either spend the time necessary to learn the ins and outs of Wall Street or rely on a trusted adviser to guide them in their investments. These days, however, almost everything has some direct tie to social media — including financial advice.

That might seem convenient at first since a few compelling tweets or a couple of videos offer a lot of salient facts that would otherwise be difficult to find. When the people behind those posts are fraudsters, however, victims can lose a lot of money.

Pump-and-dump allegations

Federal prosecutors have accused a group of mid-level social media influencers of attempting to use their platforms to convince followers to invest in stocks and artificially inflate their respective prices. All the time, they were allegedly planning to dump their own shares in the companies and make off with a healthy profit.

In total, an indictment unsealed this week in Texas showed that the fraud totaled a whopping $114 million over the course of under two years.

Through Twitter posts, podcast appearances, Discord conversations, and other online commentaries, the defendants are accused of swindling their most gullible fans.

In addition to pending federal counts, the Securities and Exchange Commission also handed down its own charges against the group.

Damning communications

According to the SEC complaint, members of the group were brazen in their discussion of the illegal ploy. When one suspect expressed some remorse about their behavior and said he wanted to “do it the right way,” an alleged co-conspirator shot back: “The f—king right way? We’re robbing f—ing idiots of their money.”

Such rhetoric is not likely to bode well for them at trial.

Joseph Sansone of the SEC described the alleged scheme succinctly, asserting that they fed their followers “a steady diet of misinformation."

Chris Agee December 15th, 2022

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